Is Whitehall's obsession with business cases getting in the way of delivery?

Written by Andrew Greenway on 6 October 2016 in Opinion

Opinion

Opinion: By dictating the conversation about money, HM Treasury exerts an enormous influence over how Whitehall thinks about answering problems

Think back to when you had to make an important purchase; big enough for the wrong call to be financially painful. A car, perhaps, or even a house. How long did it take you to write the business case?

To get under the skin of an organisation, you often have to look in the most humdrum places. To see what is in front of one’s nose needs constant struggle. So it is with the existing business case process in government.

The civil service’s approach to business cases is well established. The 5-case method set out in the Treasury's Green Book has long been the bible for how things get done. As you would expect, it is on the dense side.

The "short, plain English guide" is nine pages, and includes sentences like: “The focus in this section of the case is on capital and resource requirements (near-cash or non-cash) and so here VAT and capital charges are included. The financial case is concerned with the impact upon budgetary totals (RDEL, CDEL and AME as explained in Chapter 1 of the Consolidated Budgeting Guidance).” This is a world even hardened technocrats shy away from.

"Business cases matter. The civil service's dependence on them is one of the suspects in the mystery of why Whitehall often finds it difficult to deliver"

Even so, business cases matter. The civil service's dependence on them is one of the suspects in the mystery of why Whitehall often finds it difficult to deliver. Like the Midsomer Murders killer that’s always fixated on money, business cases are ever-present at the death of major projects. They exemplify how a series of small, sensible suggestions can slowly accrete into a stranglehold.

To see why that is, it is worth starting at the beginning. What is a business case actually for? As the Green Book says, a business case is a tool to aid thinking and frame decisions. It is the clipped intellectual framework of late 20th century policymaking. Thinking before speaking, managerial over mercurial.

It seems perverse to find anything objectionable in this. One of the challenges in making an argument against business cases is that they look like such a good idea on paper.

Of course officials should make sure their plans contain financial sense. Yes, they probably should write some of this thinking down. Yes, the cast of interested characters should meet to talk about them occasionally. But it is exactly this kind of steady accumulation that typifies a weakness of applying business cases to almost everything.

"Pretence of pointy-headed quantification"

Think of it this way. My science is a little sketchy, but as I understand it, if you were handed some very precise tweezers to pick yourself apart into constituent atoms, you would find each one entirely devoid of sentience. It is only when packed together — into the thing that is rather wondrously you — that they take on the spark of life. So it is with business cases. It is difficult to dispute any individual rule of a case. It is only malign in aggregate, a bureaucratic Frankenstein.

Responsibility for framing such arguments is the job of a small, unusual group of people. For any investment above a certain amount, the customer for any business case is the Treasury. By dictating the conversation about money, HM Treasury exerts an enormous influence over how Whitehall thinks about answering problems. If you want the cash, the idea goes, you’ll have to argue for it on our terms. By extension, that shapes what options are presented to ministers. It is perhaps no coincidence that the top ranks of the civil service are populated by HMT alumni. They are most au fait with the thinking required to release the money needed to get anything done.

Coming up with Treasury conspiracy theories is quite fun, but too simplistic as means of explaining away business cases as a problem. I once met the affable official who was in charge of the Green Book. He told me that in days gone by, he had a team of six people working on it. More recently, it was just him, and he had rather a lot else to do. If the nefarious schemers in Horseguards Road really wanted to wield business case orthodoxy as a blunt instrument of power, you think they would try a bit harder.

"Business case development is really just as fickle as the conviction-led era that preceded them"

No, the bigger problem with them is that they offer the pretence of pointy-headed quantification. Various consultancies do well out of the business case cottage industry, working alongside in-house analysts. Sometimes they are employed to actually do some strategic thinking. More often they are there to "run the numbers". This generally means: "run them along the tramlines that we already have in mind to produce the hoped-for savings".

Business case development is really just as fickle as the conviction-led era that preceded them. It is just a good deal slower, and concealed in a veneer of numbers and buzzwords. Business cases are astrology, not astronomy.

That is because at their heart, business cases are crystal ball gazing with Excel tables. Experience has shown that there is no better way to guarantee poor predictions than to use individual experts to make assumptions about the future, and sprinkle on a little cognitive bias. Yet this is exactly how we still cost up all the biggest public sector investments. We are trapped in what Nassim Nicholas Taleb calls an "Intellectual Yet Idiot"-led process.

Business cases are really about trust. When a policy team submits a business case, it gives a senior official the chance to consider whether they trust them. That trust will be shaped by a view on the quality of their thinking, yes, but also their ability to play the game, follow due process, write well and make up plausible numbers. Once trust is built with the purse strings, greater deviation from the process is allowed for. But all of those qualities are measured according to the team’s competence to deliver something which is business case shaped. It rewards means, not ends.

I think you would be better off estimating the cost of, let us say, HS2, by averaging the guesses of every single civil servant in the country. It would take you less than a day, and I bet it would be correct to within a factor of four or less. Which is about as accurate as the original business case for the 2012 Olympics.

Even better than crowdsourcing would be some recognition that if you only have a hammer, every problem is a nail. Not all the government’s investments are nails. Implementation often takes less time than developing policy now. Business cases are out of date as soon as they are committed to paper. But the skills needed to rapidly deliver a service do not always coincide with those needed to deliver a business case. That makes it difficult for operationally-minded teams to build trust with the Treasury.

Many private sector firms are trimming their own business case processes. The penny is dropping over how much time is lost by retaining overheads that deliver little for shareholders or employees. Some have scrapped them altogether. Free time goes on thinking and doing, as opposed to writing.

Civil servants worry that they have too little time to properly cogitate over their responsibilities. If business cases no longer help them think through the challenges they face, we should do something different.

Andrew Greenway is a former senior civil servant now working as an independent consultant. His civil service roles included deputy director of data analysis and horizon scanning at the Government Office for Science, and a programme manager working on digital projects for the Cabinet Office

Seb Tallents (not verified)

Submitted on 7 October, 2016 - 11:06

Great article. The biggest problem with BCs is they incentivise huge ammounts of effort in obtaining false precision over accuracy - I.e. overworked forecasts trying to build exact numbers based on approximate assumptions.
It will cost £5.43m based on x,y,z assumptions. Then by the next gate, assumptions change, and it's £6m. All the thinking that gets you from £5m to £5.43 is wasted time and effort obtaining a false precision that is smaller than the inherent inaccuracies of an estimate.
As you say it's about building trust, but the demands for premature detail and process of quibbles and adjustments lead to huge wasted time, and undermine trust when, as certainty about scope of a project leads to big shifts in cost and benefit.
If possible (and it's not true of all endeavours) you can work iteratively, it's much better to run for small periods of time on thinner cases, building as you go. This works well for tech, but not for, e.g. building a bridge